Rite Aid up with earnings; GM, Ford regain ground; LCDX, cash strengthen

By Sara Rosenberg

New York, April 2 - Rite Aid Corp.'s term loan debt headed higher during Thursday's trading session as the company came out with earnings results that showed a wider loss primarily because of non-cash charges, and in a conference call, the company discussed plans to enhance liquidity and refinance its revolver.

In more trading happenings, Ford Motor Co. and General Motors Corp. got back most of their losses from the previous day's activity as the cash market in general was better, and the LCDX 10 index moved up as well.

Rite Aid term loans rise

Rite Aid's term loan debt rallied by a few points in trading after the company's earnings results were released and a conference call to discuss those results took place, according to a trader.

The old term loan was quoted at 72½ bid, 74½ offered and the new term loan was quoted at 74½ bid, 76½ offered, with both tranches higher by about three to four points on the day, the trader said.

For the fourth quarter, the company reported a net loss of $2.3 billion, or $2.67 per diluted share, compared to a net loss of $952.2 million, or $1.20 per diluted share, last year.

The company said that the net loss was impacted by significant non-cash charges resulting from goodwill impairment, store impairment and an additional tax valuation allowance against deferred tax assets. Excluding these non-cash charges, net loss for the fourth quarter was $116.9 million, or $0.14 per diluted share.

Revenues for the quarter were $6.7 billion, down 1.7% from $6.8 billion in the prior year fourth quarter.

Rite Aid EBITDA declines

Also for the fourth quarter, Rite Aid reported adjusted EBITDA of $261.4 million, compared to $276.3 million last year.

"Despite continued weakness in the economy, we were able to improve our business significantly in the second half of the year as we completed the integration of Brooks Eckerd, enhanced our management team and focused on strengthening our financial position," said Mary Sammons, chairman and chief executive officer, in a news release.

"We made good progress operating our stores more efficiently, taking costs out of the business and reducing working capital, especially in the fourth quarter. As a result, we ended the year with our strongest liquidity position in more than a year," Sammons continued.

Rite Aid provides outlook

Rite Aid also came out with guidance for fiscal 2010 on Thursday that includes expected net loss between $210 million and $435 million, or a loss per diluted share of $0.26 to $0.53.

Adjusted EBITDA for fiscal 2010 is expected to be between $1.025 billion and $1.125 billion.

And, sales for the year are expected to be between $26.3 billion and $26.7 billion, with same store sales improving 0.5% to 2.5% over fiscal 2009.

"We are pleased with the results we have seen so far from these initiatives and expect them to deliver greater benefits in fiscal 2010 and help us manage through this difficult operating environment. We are focused on improving cash flows and expect to be in a position to start reducing our debt this year," Sammons added in the release.

Rite Aid focused on refi

In a conference call on Thursday, Rite Aid management revealed that it is talking to its lenders about refinancing options for its revolving credit facility that matures in September 2010.

The expectation is that given the current market environment, a replacement revolver will be smaller than the current $1.75 billion facility that the company has in place.

As a result, the plan is to reduce debt by $200 million to $250 million and do some other supplemental offering such as a term loan or a high-yield piece offering, officials said in the call.

At the end of the fourth quarter, the company had $724 million of availability under its revolver, and that number improved by the time the conference call was held on Thursday to $762 million of availability.

Rite Aid is a Camp Hill, Pa.-based drugstore chain.

Ford, GM improve

Ford's and General Motors' term loans posted some gains on Thursday in sympathy with the rest of the cash market, reversing most of the losses that were experienced on Wednesday after March numbers came out, according to a trader.

Ford, a Dearborn, Mich.-based automotive company, saw its term loan quoted wrapped around 48, up about half a point from Wednesday, the trader said.

And, General Motors, a Detroit-based automotive company, saw its term loan quoted wrapped around 41, up about a point on the day, the trader added.

On Wednesday, Ford's term loan fell by about a point and General Motors' term loan fell by about two points as the companies announced March numbers that showed big declines on a year-over-year basis.

For March, Ford's total sales were 131,465, down 40.9% from 222,337 in March 2008, and General Motors' total sales were down 44.7% to 156,380 from 282,732 last year.

Cash, LCDX rally

Also on the secondary front, the cash market in general felt stronger as did the LCDX 10 index, according to traders.

One trader said that in the cash market, some things were up points and some were up a little bit.

"May have been some profit taking this afternoon, but everything is up. Everyone is bidding on stuff today," the trader remarked.

A second trader said that the market continued to rally on Thursday "but not much supply out there so everyone has to reach and stuff is gapping."

Meanwhile, LCDDX 10 was quoted around 73.90 bid, 74.10 offered, up from Wednesday's levels of 72.90 bid, 73.15 offered, the second trader added.

Stocks were better as well on Thursday with Nasdaq closing up 51.03 points, or 3.29%, Dow Jones Industrial Average closing up 216.48 points, or 2.79%, S&P 500 closing up 23.3 points, or 2.87%, and NYSE closing up 181.34 points, or 3.57%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.